With his financial house in
order and key reforms passed, Premier Matteo Renzi is set to
ignore EU diktats and will send the same budget back to the
European Commission if Brussels says it should be overhauled.
The European Commission has repeatedly said it does not
like the property-tax cuts in the 2016 budget bill, reminding
Renzi that its standard recommendations to member States go in
quite the opposition direction - to shift the burden from labour
and consumption onto property among other things.
The elimination of property tax IMU and property-related
service tax TASI has also come in for criticism from the
domestic opposition, which argues it is unfair to slash taxes on
all residences, including the owners of castles and villas who
can well afford to pay them.
Renzi has retorted by saying his government, unlike
previous centre-left ones, is out to ease poverty but not at the
expense of targeting rich wealth creators.
The premier made it plain Friday he would not stand for any
Brussels strong-arm tactics, of the kind Italy has so frequently
had to submit to in previous years.
He argued that having passed key structural reforms Italy
should now be free to set its own fiscal policies, as long as it
respects the basic 3% deficit-to-GDP ratio laid down in the
Maastricht Treaty.
Speaking to Sole24 Ore financial paper's Radio 24 in an
interview Friday, Renzi stressed that "Brussels is not a teacher
giving exams, it's not qualified to intervene".
"Italy has been psychologically subordinated to eurocrats,"
he said.
The EU "can advise us, but it can't tell us which tax to
cut.
"Italy gives Europe a lot of money, as far as respecting
the parameters I would also urge taking a look at other
countries' deficit data".
In technical terms, he underscored, "there is no such thing
as negotiations" (with Brussels), and any government is fully
entitled to send back the same budget to the EC whether it likes
it or not.
Speaking at Venice's Ca' Foscari University later in the
day, Renzi reiterated that "we must stop considering the EU a
place where you go to get your orders".
"Every year we give 20 billion euros to the EU and we
receive 11...The EU is an extraordinary construction but it must
be strengthened and made to live," Renzi said.
Meanwhile Labour Minister Giuliano Poletti on Friday
spelled out exactly how much the budget will help the poor and
pensioners.
Poletti said the government will deploy one and a half
billion euros to fight poverty in 2016.
Of these, 600 million euros are contained in its draft
budget and the rest is being allocated to existing programs.
This will affect "250,000 families and 550,000 children,"
Poletti said.
As well, a tax break for pensioners will go into effect as
of 2017.
The measure may be brought forward if the EU agrees to give
Italy deficit flexibility, given that it is spending 3.3 billion
euros to rescue and host migrants and asylum seekers.
Poletti added two billion euros will be needed to cover the
government's so-called women's option in its pensions packet
through 2021.
The measure for women is one of four measures on pensions
contained in the government's budget, which cabinet approved
yesterday and is now being vetted by the EU.
The new budget also contains a two-billion-euro rescue
package for 32,000 retirees who were left out of the national
pension system on a technicality under a 2011 reform under the
previous Mario Monti administration.
"This makes a total of 172,000 people, and we now consider
the case closed," he said.
The budget currently amounts to 27 billion euros but this
may rise to 30 billion if the EU OKs a clause on the migrant
emergency, allowing Italy to raise the budget-to-deficit ration
from 2.2% to 2.4%, equivalent to just over three billion euros.
The package has not been without its critics, mainly in the
centre-right opposition.
While employers have welcomed it "as the most possible
now", trade unions have slammed it.
The leader of Italy's biggest and most leftwing union CGIL;
Susanna Camusso, returned to the attack Friday, saying the
package "only sets aside five euros a month for civil servants".
The big three trade unions, CGIL, CISL and UIL, announced a
"very tough moblisation" in support of the renewal of
public-sector contracts given that the resources lined up in the
2016 budget bill (200 million euros) are just "a tip," a
"provocation" and do not guaranteee a dignified contract for
public-sector workers.
Many public-sector workers have been waiting six or seven
years for the renewal of their contracts.
The Bank of Italy (BoI), meanwhile urged the government to
take advantage of the country's fledgling economic recovery and
favorable macroeconomic circumstances to cut public debt.
In an economic bulletin the central bank called on
policymakers "to fully take the opportunity offered by
exceptionally favourable financial and monetary conditions and
the gradual strengthening of the recovery".
"The time frame for rebalancing public accounts must ensure
a clear and progressive reduction in debt," it added.
The central bank confirmed the economy is in recovery and
revised upward its July forecasts on 2015 GDP growth.
"GDP growth could turn out to be slightly above 0.7%," it
said. It also confirmed a rise in domestic consumption and a
slow recovery in productive capital investments.
The gradual "reduction in taxes is consistent with the need
to lower elevated fiscal pressure" that is hampering growth.
"The most directly effective measures are those cutting the
burden on production factors" while the abolition of property
taxes "could have circumscribed effects on consumption," the BoI
said.
Government labor policies have generated at least one
fourth of new jobs this year. Of those, one third were directly
related to Premier Matteo Renzi's signature Jobs Act and
two-thirds to tax breaks on new full-time permanent hires,
according to the central bank.
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